Treasury Secy Scott Bessent clearly endeavors to be the second Pete Hegseth of Trump World, albeit via packing heat in the form of economic missiles rather than the kinetic kind.
In fact, however, his ballyhooed Operation Economic Outcast actually amounts to the greatest windmill tilting operations since Don Quixote himself.
So let’s cut to the chase right up front. To wit, Bessent’s premise that he can switch-off Iran’s military payroll and bring the regime to its knees by driving its oil exports to zero is wholly delusionary. The former (regime collapse) does not remotely follow from the latter (oil exports at zero), which for all practical purposes has already happened.
So herein we endeavor to explain why cutting off Iran’s oil exports isn’t any kind of war-winning silver bullet at all.
Nevertheless, on October 3rd the Treasury Secretary claimed that—
“They are isolating them economically like this never happened before. You know, right now, the score: barrels out of the Strait: U.S. about 1.1 billion, Iran zero,” Bessent told Allen.
Bessent continued, “For the first time in history, they, since they started pumping oil, they will have no oil on the water this week. They will have no revenue.”
This bombast, of course, was just a continuation of the claim he made a six weeks earlier upon the launch of Operation Economic Outcast:
Beginning today, the actions of Treasury and other agencies will tighten the noose and block every potential source of revenue that funds the IRGC and the Iranian regime… to the ordinary soldiers supporting this regime: as more and more of your paychecks stop or are supposedly “just delayed,” ask whether your commanders are leading your country to triumph or to ruin.
In short, the Bessent plan purports to “defund” the IRGC by closing the black market space where enablers buy the purportedly “illegal” Iranian oil. Thereafter per the Bessent formula, the Iranian regime’s military will be left financially high and dry as:
- oil loadings go to zero,
- export FX earnings go to zero,
- the Iranian war machine stops getting paid,
- the regime is forced to surrender or flee.
But that purported mechanism is but an illusory windmill. That’s because a regime that can still collect domestic taxes, pursue essential trade via overland routes, and, most importantly, print Iranian rials at will can keep a military payroll running long after the oil account has been bled dry.
That is to say, the military payroll does not remotely depend upon the oil export account. It is a small, prioritized claim on overall domestic product (GDP), and the arithmetic below is why zero oil export loadings do not zero it out.
We therefore start with a tally of Iran’s standing military force and the resulting payroll cost at current rates. It consists of about 880,000 active full-time soldiers, in four blocks.
These include the IRGC (Iranian Revolutionary Guard Corps) proper at about 170,000, including the ultra vicious Quds Force that sits inside that total at 5,000 to 15,000. The internal paramilitary force known as the Basij adds another 90,000.
